Correlation Between NESNVX and Zhihu

Can any of the company-specific risk be diversified away by investing in both NESNVX and Zhihu at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining NESNVX and Zhihu into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NESNVX 25 14 SEP 41 and Zhihu Inc ADR, you can compare the effects of market volatilities on NESNVX and Zhihu and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in NESNVX with a short position of Zhihu. Check out your portfolio center. Please also check ongoing floating volatility patterns of NESNVX and Zhihu.

Diversification Opportunities for NESNVX and Zhihu

-0.47

Correlation Coefficient

NESNVX  Zhihu

Very good diversification

The 3 months correlation between NESNVX and Zhihu is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding NESNVX 25 14 SEP 41 and Zhihu Inc ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhihu Inc ADR and NESNVX is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on NESNVX 25 14 SEP 41 are associated (or correlated) with Zhihu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhihu Inc ADR has no effect on the direction of NESNVX i.e., NESNVX and Zhihu go up and down completely randomly.

Pair Corralation between NESNVX and Zhihu

Assuming the 90 days trading horizon NESNVX 25 14 SEP 41 is expected to under-perform the Zhihu. But the bond apears to be less risky and, when comparing its historical volatility, NESNVX 25 14 SEP 41 is 1.63 times less risky than Zhihu. The bond trades about -0.01 of its potential returns per unit of risk. The Zhihu Inc ADR is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  364.00  in Zhihu Inc ADR on December 22, 2024 and sell it today you would earn a total of  119.00  from holding Zhihu Inc ADR or generate 32.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	33.33%
Values	Daily Returns

NESNVX 25 14 SEP 41  vs.  Zhihu Inc ADR

NESNVX 25 14

Risk-Adjusted Performance

Very Weak

Over the last 90 days NESNVX 25 14 SEP 41 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NESNVX is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Zhihu Inc ADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zhihu Inc ADR are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical indicators, Zhihu demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NESNVX and Zhihu

The main advantage of trading using opposite NESNVX and Zhihu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NESNVX position performs unexpectedly, Zhihu can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Zhihu will offset losses from the drop in Zhihu's long position.

The idea behind NESNVX 25 14 SEP 41 and Zhihu Inc ADR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.